GOLDMAN: The Billionaire vs VCU: The winner is…?

Posted at 11:49 AM, Jun 14, 2013
and last updated 2013-06-14 12:37:58-04

by Paul Goldman

RICHMOND, Va. – VCU just said “No Thanks” again to a proposed $150 million gift – it might actually wind-up being $300 million. I know what you are thinking: “Heck, if they don’t want it, I’ll take it.”

Sorry, it doesn’t work that way. Truth is: Sooner or later, VCU will have to say YES instead of NO. Eventually someone in authority at VCU will realize they are playing a lose-lose game in terms of their image in the community.

[Click here: Debate lingers over plans for Richmond children’s hospital]

As the saying goes: Money talks. Local business Bill Goodwin, as Marlon Brando might have said in Godfather I, has made an offer VCU can’t refuse. Here’s why.

Bill Goodwin believes we need a new, state-of-the-art Children’s Hospital.

True, he is a business guy, not a medical guy, not even a health care industry guy. But he made a lot of his money in the bowling industry, so he knows when he is on a roll.

So yeah: If it were just Mr. Goodwin wanting a new Children’s Hospital, then the opposition of the VCU health systems – the area’s second largest employer – would prevail. Their expertise would trump his money. He has done a lot for VCU. But he would accept losing this one.

However, Goodwin’s vision is shared by almost all of the area’s leading experts in the field of children’s medical care. This includes not only a large organization of kid docs, but the other leading health care systems serving the area. Yes, they are competitors of VCU. So yes, they have a business reason to be backing Goodwin over VCU. That’s clear.

However, VCU doesn’t challenge Goodwin’s basic premise. So the competitors actually agree on the basic need for a Children’s Hospital. Thus their opposition to Goodwin can not sit well with him. Nor should it. He is prepared to do a very good thing. He has a right to believe VCU is being selfish. My reading is that Mr. Goodwin is more than a little annoyed with VCU. I think it is justified.

But as the saying goes, the “devil is in the details.”

VCU is no doubt making this point in private. Goodwin might be Mother Teresa, but VCU no doubt rightfully feels its competitors are making a business decision, not a charity decision. I get that. Where there is a lot of money to be made there is usually also a lot of power to be had. Thus building the hospital isn’t the big question. VCU no doubt chafes at being seen as the bad guy here. Welcome to the real world.

Still, they have a point: Right now, all the major health care providers have their own assets and systems dedicated to children’s health. These services generate a certain revenue, they are expected to generate increased revenue in the future. Children’s health care dollars play a key role in the viability of these systems. Don’t be fooled by the non-profit vs for-profit health care part of the debate. All the organizations have covered their expenses and still have bucks left over for investments, etc.

Money talks.

Meaning; How do all these current and future expectations interface with the new Children’s Hospital? Right now, all the competitors do their own thing their own way with their own assets.

They make their own bottom line decisions.

But the Goodwin vision is not to create a new Children’s Hospital as a competitor to all the existing systems. That isn’t financially viable. He is taking everything to a new level.

Is it done this way anywhere else in the country? I don’t know.

Rather: The Goodwin vision requires all the health care systems to figure out a way to make the new hospital the focal point of their children’s care to the maximum extent possible. I don’t claim to know the details or an expertise in the area. But from what I can tell, it would require a whole new type of cooperation between competitors than is currently the case in any sphere of medicine in our area.

Or put another way: It requires 100 percent competitors to take a new approach in this area, a mix of competition and cooperation, demanding mutually agreeing to put the new hospital front and center in this fight for medical bucks and power.

How does that work exactly? Can it work? What happens if one or more competitors decides this is a bad deal for them? The questions are likely endless.

For the private kid docs, the hospital is likely a no-brainer: all upside. But to the large health care systems, I got to figure it is a lot tougher call.

Goodwin understands money and power. So he has conditioned his $150 million opening ante on a cooperation agreement between the competitors. This is not only a new mind set for them, but it changes their business models presumably.

Like I say, it is not the normal way they do business. Everyone is for better care for kids. But in America, life is just not that simple.

Thus the long story short: The other major children’s care players in the area are willing to go along with Goodwin’s cooperative vision, at least in general theory. VCU is the holdout.

As best I can tell, this is still like the Vietnam War peace negotiations: the first step is to get everyone to the table with a pledge to find a peaceful solution. Or put another way: Goodwin wants to get everyone in the room, lock the door, throw away the key and not let anyone out until he has a deal signed.

This is what J.P. Morgan did to solve the banking crisis of 1907 if I remember my history. He put up the big bucks too.

Is Bill Goodwin that good? From what I know, he is that quality of player

VCU has been resisting that dynamic.

But in the end, it doesn’t matter. Why?

My analysis: VCU is playing a losing hand.

There are only three broad outcomes, all bad for VCU.

They can either (1) block the hospital, (2) be forced to cave-in and thus lose a huge amount of respect not to mention leverage, or (3) build their own hospital, which will be derided as inferior and is a big financial risk.

Whether true or not, each option means VCU will be seen as putting their own power and revenue ahead of the needs of the children of the community.

Like I say: it doesn’t matter whether this is a bum rap or not. VCU operates in the arena of public opinion as a public university. This lose-lose-lose scenario is bad for them.

That is still true even if I concede that the other health systems and many key players have reasons of profits and power to be backing Goodwin. VCU may have legitimate beef. But it is of no moment in the long run.

VCU will have to accept reality: Mr. Goodwin is willing to provide a lot of money for a good thing. A whole lot of money. He is defining the public debate.

To date, VCU has not been able to articulate a sufficiently persuasive reason to be seen as killing the project. If they want to kill it, then they have to hire a lot better PR firm to sell their side of the story.

Bottom line: Goodwin can’t lose in the court of public opinion, and VCU can’t win. Even if VCU has a credible argument for opposition, it ain’t enough.

Eventually, someone in authority at VCU is going to realize a public institution can not afford to be in a such a losing posture on this issue. The cost is too high. They will need to sue for peace.

My bet: VCU will realize they can’t been seen as the one killing the project. On a net-net basis, they at least have to be seen as making a truly honest effort to make the project work.

If they are slick enough, they can kill it without getting the blame. But right now, it is lose-lose for them. The President of VCU is going to realize this reality real soon.

The Goldman bottom line: My money is on Dollar Bill. He is doing a good thing. He will get VCU to agree to make one last honest effort to reach a cooperative agreement.

Bill Goodwin understands what that means: He will have to sweeten the pot for VCU. He has known that all along. This is child’s play for him.

Let the man build his hospital. It will only save lives and change lives. In the end, this is the only marker the community can use to decide whose on the right side.

Paul Goldman is in no way affiliated with WTVR.  His comments are his own, and do not reflect the views of WTVR or any related entity.  Neither WTVR nor any of its employees or agents participated in any way with the preparation of Mr. Goldman’s comments.